The Packaging Industry is Massive, and It’s About to Be Disrupted

Technology isn’t just for creating new products and services. Disruptive technologies are transforming the packaging that comes with just about everything we buy.

Imagine a day when you receive an alert from your refrigerator as you walk past 7-11 because the carton of milk at your home just expired. Or a day when you receive a robocall warning you that the bag of lettuce you’re planning on using for your salad is tainted with e-coli. Or a day when you’re able to toss a “plastic” cup into your garden knowing it will biodegrade and fertilize your flowers.

Transforming Packaging

I recently had the chance to speak with Omer Gozen, Vice President and Global Head of New Materials and Packaging at Plug and Play. Running this program at one of Silicon Valley’s largest venture capital firms and start-up accelerators gives Gozen the inside scoop on where things are headed.

According to Gozen: “In recent years, large corporations, start-ups and venture capitalists have been pouring millions into developing new ‘smart’ materials and ‘connected’ packaging that differentiates their companies, brands and products.” That’s not surprising given the packaging and packaging materials industry is expected to exceed $1.3 Trillion by 2024.

If any industry must live and die by the mantra “disrupt or be disrupted,” it’s packaging. A recent French law requires all disposable tableware to be made from 50% biologically-sourced materials that can be composted at home by 2020. In the same year, Iceland will completely ban the sale of plastic cutlery, cups and drinking straws, and cosmetics that include microplastic beads across the entire country. Companies that don’t transform will be instantly shut out of these and other markets.

The largest corporations see the writing on the wall: McDonald’s recently set a goal of having 100% of its customer packaging come from renewable, recycled, or certified sources by 2025. Adidas will stop using virgin polyester by 2024, only using recycled materials to create its products. And this is just the tip of the proverbial (melting) iceberg.

Drivers of Packaging Disruption

There’s been a lot of buzz recently related to the announcement by Procter & Gamble, Unilever, Nestlé, PepsiCo, Danone, and others that they’re working together on a project called Loop to promote beautifully designed reusable packaging based on a subscription business model – including Pantene shampoo, Haagen-Dazs ice cream, and Crest mouthwash. Another source of innovation is packaging based on concentrated products and lighter weight materials like Tide’s new Eco-Box. Shipping bottles of liquid detergent around the world, for example, is both financially and environmentally costly.

Reusable packaging isn’t as much about wiz-bang technology as product design and supply chain innovation. Higher-tech drivers of industry transformation include smart labels, the internet of things, data analytics, and blockchain. These disruptive technologies will help track and trace products, provide anti-counterfeit protection, deliver better retail experiences, and engage consumers in new ways.

So, who’s transforming the space? Some of the top start-ups coming out of Plug and Play’s incubator ecosystem include:

Adrich: Uses smart labels to gather data and then leverage machine learning for seamless consumer reordering and more predictive order lead time for manufacturers

Verisium: Building platform for product authentication and customer engagement across the supply chain and consumer experience

Is It Fresh: Using its “freshtag” NFC labels and cloud-based infrastructure, creating re-brandable smart packing platform for global companies across industries

Transformation from the Inside-Out

Transforming the packaging industry isn’t just about start-ups. At Plug and Play, Gozen’s team works closely with corporations that have an interest in commercializing new materials and packaging solutions that change the game. Some of Plug and Play’s corporate partners that are leveraging its innovation ecosystem include ExxonMobil, Sherwin Williams, PepsiCo, and Aptar Group.

Aptar, for example, is a Fortune 1000 company and one of the world’s leading suppliers of dispensing, sealing and active packaging solutions for customers including Estée Lauder, L’Oréal, P&G, Unilever, Nestle, and many others leading consumer brands. According to Jean-Marc Pardonge, Vice President of Innovation, “Investing in sustainability and the future of packaging isn’t just responsible, it’s essential for long-term competitiveness and business growth.” This is exactly why Aptar established an “Innovation Excellence” function that’s actively scouting and working with start-ups, suppliers, and external experts to shape the future of the industry. Some of Aptar’s recent innovations include its Flip Lid and Stay-With technology to ensure the caps from products like water bottles aren’t lost and discarded so they get recycled along with the bottle.

Re-Packaging the Packaging Industry

Opportunities for packaging innovation will only grow as new technologies like blockchain, intelligent inks and printable circuits and sensors evolve. “The future is connected, automated, and personalized,” says Adhithi Aji, the Founder and CEO of Adrich, one of Plug and Play’s portfolio companies. These technology and design innovations will fuel new “data-as-a-service” business models tied to traceability across the supply chain, consumer product usage, and overall market insight.

Product companies that don’t fully consider the role of “the package” in their business models and consumer experiences will miss the boat. Pure-play packaging companies that don’t embed themselves into the innovation strategies and processes of their product-focused customers will become expendable commodities.

It’s time to re-package the packaging industry.

Wait! Before you go…

Soren Kaplan is the bestselling and award-winning author of Leapfrogging and The Invisible Advantage, an affiliated professor at USC’s Center for Effective Organizations, a former corporate executive, and a co-founder of UpBOARD. He has been recognized by the Thinkers50 as one of the world’s top keynote speakers and thought leaders in business strategy and innovation.